September 17, 2018

RVR, Uganda Railways dispute goes into arbitration

rvr1March 9, 2017- The Commercial Court in Kampala has sent troubled regional railway concessionaire Rift Valley Railways Corporation and asset holder Uganda Railways Corporation into arbitration, to find an amicable settlement to a dispute over a concession agreement.

Rift Valley Railways RVR, went to court last year seeking conservatory orders against the Attorney General and Uganda Railways Corporation URC, after the latter issued a notice cancelling a 25 year concession for management of railways assets.

Although URC has since backpedaled on the notice of termination, the two parties are still locked in a dispute over moneys owed, that could still culminate in termination of the concession.

RVR had kept URC reigned in by successive injunctions but 256BN has been told that the Commercial Court withdrew the temporary injunction on March 5 and ordered the parties to go into arbitration.

The parties are yet to select an arbitrator and the location of the proceedings but have until March 15 to commence the hearings.

URC was claiming $29.4 million in economic depreciation on the considered asset account and $8.4 million in outstanding concession fees. RVR disputes these numbers but details were not immediately available to 256BN.

Although RVR spent close to $300 million in shareholders capital and debt, only about $40 million of this was injected into the Uganda operation owing to the short sector – only 273 kilometres of the 1200 kilometre line.

Despite this, RVR was earning 80pc of its revenue from Uganda while Kenya, with the longer sector, generated only 20pc of the revenue but 80pc of the costs.

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